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Defence &#8211; the biggest area of spending we don&#8217;t talk about

Andrew Carr, Peter Dean

Prime Minister Tony Abbott in the cockpit of of a replica Joint Strike Fighter. The government will buy 58 jet fighters. Photo: Alex Ellinghausen

Budgets are a reflection of the nation’s priorities, not only in terms of what we spend but in terms of the issues dominating the ensuing debate.

Tellingly, while Defence received a small but solid increase in funding, it has been largely absent from the government’s sales pitch or the response to the budget.

The Treasurer devoted just one line in his budget speech to defence issues. This stated that the government remained committed to achieving a target of spending 2 per cent of Australia’s gross domestic product (GDP) on defence.

Meanwhile, and indicative of the level of domestic political capital it has invested in non-traditional security issues, asylum seekers and customs received close to a paragraph.

In the public debate that followed, while a few stories and blogs by defencecommentators emerged, the public interest in the increased funding on what is the fourth largest area of spending (behind social security, health and education) was largely absent.

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That’s not surprising given people care far more about cuts and costs to themselves than the Department of Defence and the long-term management of strategic risks.

But the government’s unwillingness to trumpet its spending on Defence (as opposed to its medical research fund), and even less public interest in this area of government outlays, shows that there is still a long way to go to shore up support for a sustained period of much-needed growth in defence spending.

To a large degree, the government has deferred this task to the next defence white paper (expected March 2015). Apparently, it will lay out "how the government will increase Defence spending to two per cent of GDP".

Hopefully in that document we will finally receive a coherent justification for the government’s set target of 2 per cent.

As we have previously shown, the 2 per cent target emerged not out of a considered analysis of Australia’s defence environment and needs but because of a pre-election bidding war.

After it was pointed out that Australia’s defence spending in 2012, when measured as a percentage of GDP, was similar to that seen in 1938, a consensus seemed to emerge that GDP was the right way to assess defence policy. This meant that in a relatively short period of time an arbitrary target of 2 per cent came to be adopted by both major parties.

In this year’s budget, the government has taken a real and important step towards achieving that goal. It brought forward about $1.5 billion in new funding over the next four years.

But despite the sums involved, none of this made the Treasurer’s speech. In terms of national priorities, it would seem in this budget defence just isn’t an issue.

It suggests that the government is yet to formulate a plan to publicly justify devoting increasing funding to Defence.

Two years out from an election, it is easy to have a tougher budget that makes unpopular cuts and funnels money to issues such as defence that are not public priorities. But it will only get tougher from here.

Over the forward estimates, the real risk is that because of either declining financial circumstances (such as a downturn in trade with China) or a need for major new funding in some other area (such as reconstruction after a natural disaster like the Queensland floods), continuing to support growing defence funding will potentially get very tough.

As we saw with a number of responses to the government’s decision to buy an additional 58 F-35 Joint Strike Fighters, such as demands for “more brains not warplanes”, it will be easy for critics to compare defence spending with deter threats we might never face, with the real harm and costs suffered by the community today.

This is the real problem with the government’s 2 per cent target.

In its first budget we’ve seen it set the foundation for this spending ambition. But for the time being it is attempting to achieve it, without shoring up a broad public support goal.

Its approach has been to go about its business in defence relatively quietly and without attracting much interest from the public. That will have to change and the government will have to be ready with a strong policy justification.

Finally, it’s notable that the government did not use the lack of public focus on defence as an opportunity to try to radically reform how Defence operates.

It ignored the Commission of Audit’s recommendation to bring the Defence Material Organisation (which buys the ships, tanks and capabilities of the military) back inside the organisation. And while there were cuts to 1200 civilian defence officials and the generosity of the uniformed members superannuation scheme, Defence is an organisation still in need of major structural reform.

Overall, this was a good budget for Defence. But to turn this increase from a data point to a trend line towards a more secure Australia, the government and the country will have to start paying more attention to defence.

The bigger challenge will be convincing the public it is right to do so.

Dr Andrew Carr and Dr Peter Dean are based at the Strategic and Defence Studies Centre in the Australian National University’s College of Asia and the Pacific. Read why they think 2 per cent of GDP is not the right formula for defence spending in their latest Centre of Gravity series policy paper.